950 N.E.2d 1236
Ind. Ct. App.2011Background
- Guideone, subrogee of homeowners Schafstall and Alexander, sues Lowe's and U.S. Water over a defective water system installed May 2006, allegedly causing flood damage of about $115,000.
- Lowe's sold the system and provided a warranty; Addendum limits its remedy to reinstallation and excludes incidental/consequential damages, among others.
- Lowe's subcontracted installation of the water system to U.S. Water; the system flooded the home hours after installation.
- Guideone alleges Lowe's breached the installation warranty and seeks to recoup the flood damages under subrogation.
- Trial court: (i) held Lowe's liable for warranty breach; (ii) limited Lowe's liability to the water system value plus minimal installation amount; (iii) dismissed U.S. Water on certain claims; various motions on evidentiary matters were resolved.
- This appeal and cross-appeal follow, with Lowe's challenging the scope of liability and Guideone challenging dismissal of claims against U.S. Water and other evidentiary rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Alexander bound by Lowe's contract with Schafstall? | Alexander bound via agency or ratification. | Alexander not bound; no agency or ratification. | Alexander bound |
| Does the economic loss doctrine bar Guideone's claims against U.S. Water? | The 'other property' damages from flood are recoverable. | Economic loss doctrine precludes recovery absent injury to other property outside the water system. | Economic loss doctrine allows 'other property' exception; dismissal reversed |
| Did the Addendum's limitation on remedies cap Lowe's liability to Guideone? | Limitation clause should not bar full tort-like recovery. | Limitation controls; exclusive remedy is reinstallation with limited scope. | Liability limited to water system value and minimal installation amount |
| Do the sheet and Addendum terms conflict; which governs the express warranty? | Sheet creates express warranty; conflicts with Addendum. | Addendum terms govern; sheet directs to contract details. | Addendum controls; no conflict with sheet; terms binding |
Key Cases Cited
- Heritage Dev. of Ind., Inc. v. Opportunity Options, Inc., 773 N.E.2d 881 (Ind. Ct. App. 2002) (agency relationships may be proven by circumstantial evidence)
- Gallant Ins. Co. v. Isaac, 751 N.E.2d 672 (Ind.2001) (agency authority; real or apparent authority limits)
- Reed v. Central Soya Co., 621 N.E.2d 1069 (Ind.1993) (economic loss defined; tort/contract distinction)
- Gunkel v. Renovations, Inc., 822 N.E.2d 150 (Ind.2005) (economic loss doctrine; 'other property' concept)
- Indpls.-Marion Cnty. Pub. Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722 (Ind.2010) (economic losses; damages to 'other property' nuances)
- Carpetland U.S.A. v. Payne, 536 N.E.2d 306 (Ind. Ct. App. 1989) (promissory terms and conflicting warranties)
- Fresh Cut, Inc. v. Fazli, 630 N.E.2d 575 (Ind. Ct. App. 1994) (contract freedom and terms of sale)
- Pinnacle Computer Servs., Inc. v. Ameritech Pub., Inc., 642 N.E.2d 1011 (Ind. Ct. App. 1994) (contract terms; binding effect of signed agreements)
- Buschman v. ADS Corp., 782 N.E.2d 423 (Ind. Ct. App. 2003) (assent to terms; implied knowledge of contract terms)